Metro Bank sells personal loan book in switch to specialist lending
Metro Bank is set to sell its £584m portfolio of unsecured personal loans as the lender switches prioritisation to specialist lending.
The disposal, which was first flagged as a possibility at the end of January, will generate £11m in gains for the FTSE 250 bank.
The deal – with an undisclosed buyer – comes ahead of the firm announcing its annual results on Thursday morning.
Peel Hunt analysts Robert Sage, Stuart Duncan and Stephen Payne said: “By downsizing exposure to legacy unsecured personal loans more rapidly than expected, Metro can free up funding and capital to scale up its commercial and corporate lending balances, which have higher risk-adjusted returns sooner than guided.”
Demand for commercial lending is up
The analysts added demand amongst commercial and corporate lending was “high,” therefore the disposal could bolster the bank’s balance sheet.
Sage, Duncan and Payne added: “The steadily rising groundswell of positive news for Metro continues with this announcement.
“Having set out an ambitious and transformative strategy aiming to generate returns above the sector average, management is now showing how it may be able to deliver on its plans even more rapidly than its already tight stated timeframe.”
They added target price and recommendations will be updated following the bank’s full-year results.
Metro, which has an estimated three million customers in the UK, has not issued a new personal or unsecured loan since 2023, as specialist lending became a central focus.
The lender announced a series of cost-cutting moves at the beginning of the year, with 1,000 jobs axed and a scaling back on its high street stores opening times.
Commenting on the sale, chief executive Daniel Frumkin said: “The sale of our unsecured personal loan book is in line with our strategy and positions Metro Bank strongly for future growth.
“Upon completion, the transaction is capital accretive and will allow us to further optimise our balance sheet as we strengthen our position as a specialist lender of choice.”